Fund of Fortnight

MF Select- This is our mutual fund recommendation. Every fortnight , we recommend one open-ended equity diversified fund that has the best potential of returns for the next one year considering its constituents remain the same.

Invesco India Mid Cap Fund - Direct Plan (Growth)



Reason for recommendation

The midcap index has been underperforming large cap funds for a while now. However, in the last three months, we see that the midcap index has started outperforming the largecap index. In the last one-month and three-month period, the Sensex has moved up by 2.42 per cent and 10.05 per cent, respectively. While the BSE Midcap has generated a respective return of 3.3 per cent and 13.14 per cent in the same period. It looks sustainable and, hence, makes sense to be the part of this growth.Invesco India midcap fund is one such fund from the midcap category that will help investors gain from the rise in midcap. At the end of October 2019, almost 68 per cent of the total corpus of the fund has been invested in midcap stocks 15 per cent is invested in smallcap and 12 per cent in largecap stocks. The best part of the fund is that it has been performing in both rising as well as falling markets. For example, in 2018, the fund was able to arrest its fall to 5.27 per cent compared to the average category fall of 11.91 per cent. In 2017, when the market was moving up unidirectional the fund generated 44.32 per cent of return compared to 42.47 per cent by the category average. The fund follows a bottom-up approach to portfolio construction and remains sector agnostic. It concentrates on quality companies with higher return ratios along with healthy cash flows. In terms of growth and value, the fund is more tilted towards growth. The fund is well-diversified, with 42 stocks and has been overweight on Healthcare and Energy. In terms of stock, the fund seems to bet on momentum stocks, such as ICICI Bank, Cholamandalam Investment & Finance Company, and Sanofi. These stocks are likely to perform better going ahead. The fund is suited for risk-taking investors with an investment horizon of a minimum of three years.